Cross border insolvencies and financial restructurings are remarkably opaque considering we live in the Information Age. The mission of the Centre of Main Interest (the COMI) is to light some candles in the darkness and create a forum for further discussion. The Law Offices of Tally M. Wiener, Esq. are pleased to publish the COMI blog.
We welcome comments via posts to this site. Please send inquiries via email to tally.wiener@thecomi.com.

Counter

Wednesday, March 12, 2014

Tokyo lawsuit raised red flags on Mt. Gox funding, compliance

We note that the laws of some jurisdictions treat investors who make redemption requests prior to a bankruptcy filing better than investors who did not try to redeem. The bankruptcies pending in Japan and in the U.S. will raise many interesting questions including how to treat customers who are similarly situated similarly.

Bitcoins also raise regulatory questions because they concern a "digital currency" or "crypto currency."

Per www.reuters.com:

Mar. 12, 2014

TOKYO (Reuters) - Two months before Mt. Gox filed for bankruptcy it was sued by a customer seeking the return of funds in a case that highlights some of the red flags raised in the run-up to the collapse of what was once the world's biggest bitcoin exchange.

New York resident Marko Simovic filed a civil action at the Tokyo District Court on December 24, seeking to recover $105,000 he had on deposit at Mt. Gox and about $14,000 in interest, court filings show.Simovic, who described himself as a software developer who previously managed the bitcoin operations for a hedge fund, said Mt. Gox dodged repeated requests to withdraw funds from his account, which as of July 1 was credited with $935,000 in cash. Simovic could not be reached for comment.

Mt. Gox refuted Simovic's claims in a brief filed by law firm Baker & McKenzie. It said Simovic didn't comply with online procedures, and cited withdrawal limits that would have required two months for him to draw down his account. That rebuttal was submitted to the court three weeks before Mt. Gox filed for bankruptcy protection on February 28, saying it had lost bitcoins and cash worth more than half a billion dollars to hackers.

The lawsuit was cited in a U.S. bankruptcy filing earlier this week, which is related to the company's Tokyo bankruptcy proceedings.

For more, see
http://news.yahoo.com/tokyo-lawsuit-raised-red-flags-mt-gox-funding-132146178--sector.html;_ylt=AwrBTzkMmyBTPH0A8PNXNyoA;_ylu=X3oDMTB0Nml0YmltBHNlYwNzYwRjb2xvA2JmMQR2dGlkA1ZJUDA1MF8x